The dispute between Vistra ITCL (India) Private Limited and Ansal Properties & Infrastructure Limited (APIL) has been brought before the Delhi High Court. Retired Supreme Court judge Justice MR Shah has been appointed as the sole arbitrator in this case.
Vistra, a debenture trustee, filed a plea requesting the appointment of an arbitrator. The dispute revolves around a group housing project undertaken by APIL on a 41.16-acre land in Ghaziabad, Uttar Pradesh. The project was executed by Ansal Urban Condominiums Private Limited (AUCPL), which is primarily owned by Ansal Landmark Townships Private Limited (ALTPL) and Ansal Landmark (Karnal) Townships Private Limited (ALKTPL), both associates of APIL.
As part of the project funding, Indostar Capital Finance Limited agreed to invest ₹150 crore in AUCPL by subscribing to 1,50,00,000 secured, unlisted, redeemable, non-convertible debentures. AUCPL committed to repaying the subscribed amount, along with interest and default interest, on specific dates.
According to the repayment schedule, one-third of the amount was due on the 24th month, one-half on the 30th month, and the remaining balance on the 36th month from the closing date.
Vistra was appointed as the trustee of the debentures through a debenture trust deed (DTD) executed alongside the debenture subscription agreement (DSA). The debentures were transferable, and subsequently, Indostar sold them to IIFL Income Opportunities Fund (IIFL) in October 2015.
By December 2015, AUCPL had redeemed 50,00,000 debentures held by IIFL, leaving IIFL with 1,00,00,000 debentures. In 2016, ICICI Prudential Real Estate AIF-II (IPRU), another debenture holder, notified the obligors, including APIL, that an amount of ₹6,23,25,599 was due as unpaid interest on 57,00,000 debentures.
IPRU requested AUCPL to make the payment within a week, but AUCPL failed to do so. On July 31, 2017, AUCPL was expected to redeem one-third of the outstanding face value of the debentures along with accrued and unpaid interest. However, AUCPL breached this deadline, resulting in an event of default.
On October 16, 2017, IPRU issued a notice demanding AUCPL to repay ₹60,07,15,385 within 7 days, representing unpaid interest and redemption amount. In response, AUCPL requested additional time to make payments, citing a financial slump.
When AUCPL failed to make payments, IPRU accelerated the repayment of 83,00,000 debentures under the DSA on December 15, 2017. AUCPL and the guarantors, including APIL, were called upon to repay the entire outstanding face value of the debentures along with a default interest rate of 27% within 7 days.
As AUCPL did not make the payments, Vistra invoked the deeds of personal guarantee (DPG) on February 12, 2018, and initiated arbitration proceedings against the personal guarantors. The sole arbitrator passed an award against the guarantors, ordering them to jointly and severally make payments of ₹187,50,93,000, along with a default annual interest rate of 27% from December 11, 2018, until repayment.
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